Shortly before midnight between Thursday and Friday, Energy Minister Eli Cohen announced that his counterpart, American Energy Minister Chris Wright, was canceling his visit to Israel. This is due to “Energy Minister Eli Cohen’s refusal to approve the export of gas to Egypt until Israeli interests are secured, and a fair price for the Israeli market is agreed upon.” In other words, the giant deal worth 35 billion dollars, to export dramatic quantities of gas from the Leviathan reservoir to Egypt, will not receive the desired export permit for the time being. Meanwhile, the American administration is exerting great pressure on Israel to approve the export of gas to Egypt, Prime Minister Netanyahu is also involved.
These things are happening against the background of the collapse of the largest gas deal in the Israeli economy, between the Tamar reservoir and the electric company. The deal, which was supposed to set an agreed price for the coming years and extend the agreement between Tamar and the electric company until 2035, collapsed after most of the partnership (apart from the operator Chevron and the small partner Dor Energy) withdrew from it due to a dispute over the price – and preferred to go to arbitration in London. There, the arbiter will be able to decide on a gas price that is up to 10% higher than today’s price – something very significant for our electricity prices.
After the signing of the huge deal with Egypt, in which the Leviathan reservoir will export to Egypt 130 BCM of gas (for comparison, the entire reservoir has 600 BCM) worth 35 billion dollars, it was agreed to build a brand new export pipeline in Nitsana, to which all the gas reservoirs in Israel joined. This, even before the final export permit was given, which is now in question. New Med, the largest holders of the Leviathan reservoir that could be competition for Tamar in a deal with the Electric Company, say that they have not yet submitted a concrete offer to the Electric Company but have promised to participate in a tender when there is one towards 2030. So it seems that until that happens, the Electric Company will be forced to plead its claims before the London Arbitration Court as agreed upon between them and the Tamar Partnership.
The Ministry of Energy, it seems, is interested in holding the export permit from Levitan as a guarantee to guarantee a favorable gas price for the Israeli economy, and will not be willing to approve it before then. According to the statement of Energy Minister Eli Cohen: “In recent days, a very large pressure campaign was conducted by the American administration on Israeli officials, including Minister Eli Cohen and the Prime Minister, in order to approve the agreement to export gas to Egypt in the amount of 35 billion dollars”, but “Minister Cohen demanded that the prices for the Israeli market remain attractive. Since the negotiations have not yet been completed, Minister Cohen refused to approve the export until the issue is resolved. At the same time, an activity was carried out to settle the political issues between Israel and Egypt.”
Prime Minister Netanyahu is personally dealing with the gas agreement with Egypt due to its strategic importance, but it seems that at least for the moment – the entanglement of the Tamar deal with the electric company does not allow him to get started.
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